Bitcoin has fallen to its lowest value since the start of 2021 as worries about tightening regulation in China sparked a new sell-off in cryptocurrency markets and reignited talk of a crypto winter.

In the past 24 hours the popular cryptocurrency has lost more than 10% to $29,204, plunging below $30,000 for first time since January and to its lowest price since December 2020, effectively wiping out all of its gains since the start of the year.

The $30,000 level is considered a key support level for bitcoin by technical analysts.

By early Wednesday (23 June) the price had bounced, rallying to $34,122, yet data from aggregator Skew shows that bitcoin is on track to post its worst quarterly performance (to end June) since 2018, and might also be the second-weakest quarter in the last eight years since the start of 2014.

CHINESE DRAGONFIRE

The latest sell-off appears to have been triggered by an announcement from the People’s Bank of China on Monday (21 June) that all financial institutions in the country should stop facilitating transactions in digital currencies.

The move also followed efforts by provincial authorities to clamp down on bitcoin mining, with officials in Sichuan province, one of the biggest hydro-based crypto mining hubs in China, becoming the latest provincial authority to ban the practice last Friday.

Bitcoin’s rise in the last 12 months has had a lot to do with financial institutions, companies and billionaire investors buying bitcoin in large quantities. The surge in interest from mainstream financial players has not only reformed bitcoin’s image but has also fomented a supply shortage, which helped drive up the price of the digital token.

But since the price of bitcoin peaked at over $63,000 in April, the last few months have been rough for the world’s biggest cryptocurrency as regulations tighten and concerns about the huge energy toll bitcoin mining requires emerge.

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Issue Date: 23 Jun 2021